A recurring theme in health care is change. One very small facet to medicine is reporting clinical services to insurance payers. As medical science advances so must the means of describing it and reporting it for payment. We know that change is on the horizon for the reporting of diagnosis codes. We also know that numerous foreign nations currently have one form or another of ICD 10 in place. What makes the United States version of ICD 10 unique however is the PCS modification. The PCS modification is a coding system for hospital use and it describes procedures performed for inpatient only services.

There are certain surgical procedures classified by Medicare as inpatient only services. One of the main differences between inpatient and outpatient services is the way they are reported to Medicare for payment. Outpatient services are reported using Common Procedure Coding System or HCPCS codes, and insurance carriers reimburse those services based on a fee schedule per line item. There are some intricacies as to how multiple services are packaged or “bundled” but for all intents and purposes these services are paid per procedure performed or service rendered.

Inpatient services however are reimbursed based upon something called a diagnosis-related group, or DRG. DRGs lump groups of patients with similar conditions into one category. The theory behind this is that patients with similar conditions would require similar resources to treat. DRGs are determined by combining the patient’s signs, symptoms or diseases, services performed, age, discharge status, and any complications and co-morbidities (cc).

Think of a DRG as a debit card with set dollar amount affixed to it. The more efficiently the hospital treats the patient, for example, coordinating discharge on a timely basis, and/or possibly limiting tests that may be of questionable diagnostic significance the more profit the hospital will realize as a result of that visit. DRGs main purpose was to give hospitals a means by which to identify and influence its physician providers’ behaviors and perhaps modify them. This however has not necessarily proved to be the case.

As mentioned DRGs are determined by signs, symptoms or diseases or in other words, ICD diagnosis codes, and the services rendered, ICD PCS codes. Let us take a look at how the PCS piece of ICD looks now compared to how it will look in 2014. Take for example something fairly common and relatively simple, a laparoscopic appendectomy. Currently your hospital reports this service as 47.01. With ICD 10 PCS that same procedure would look like: ODTJ4ZZ. The reporting of laparoscopic appendectomy received quite a make over. Let us examine what each alpha numeric character refers to:

O: Section of ICD PCS. In this instance it is from the Medical/surgical section.

D: Body system, for this service it is the gastrointestinal system.

T: Root operation for appendectomy is resection.

J: Body part, here appendix.

4: Approach, in this instance it was laparoscopic.

Z: Device, there was no device implanted so the place is held with the letter Z to indicate that there was no device.

Z: Qualifier, since Z is in the 10th place there is no qualifier.

As one can see these new code sets allow for greater specificity which is precisely what governmental payers are so desirous of. Is this necessarily a bad concept? Not at all, however it will require physician providers to document in much greater detail. If not, services will be incorrectly reported and the result: improper payments.

A tremendous push to educate coding professionals is underway and this is very important. However, if the operative report that is used to affix codes does not specify the approach for example, how can the correct ICD 10 PCS code be selected? Clearly, physicians as well need to be educated regarding proper documentation so money is not left on the table for the hospital.